What happens to saved up benefits after death?

Eliza_2

A colleague at work today, whose father died few while ago, told me that since his death they have found that he had some savings, they're not entirely sure at the moment, but probably nearly £20k, maybe more. He was on benefits and had been for years and years due to disability before pensionable age. He gave everyone the impression he was very poor, had lots of charity, including financial, handouts, clothes, people bought him meals, took him out and so on (he was a lovely chap so everyone was happy to do this!), he was a well known character in his village, but it seems that instead of spending his benefits on himself, he was squirreling it away or at least, just didn't need it even though he was entitled to it.

What should happen to this money? She feels she wants to return it to the government (not quite sure how) and apparently has notified housing benefits people and some other department. She feels bad that he has received this money when others worse off than him, should have had it.

I seem to remember something about a £16k threshold for savings before benefits are cut but not sure.

Does this money form part of his estate and can she and her brother inherit it or should it go back whence it came?

She hasn't really asked for my advice, she just wanted to offload a bit, but I thought I'd try and find out anyway just in case it helped her. Thanks

madbadrob

I think she needs to ask the DWP and HB people first if they are satisfied with the situation then the money should be divided as per the will if he had one

Rob

getmore4less

It is likely DWP and any other benefits provider might want to do a review and look at if any of the benefits were claimed when they should not have been.

It might get messy because AIUI they expect the executor to do a lot of the research going back through the accounts establishing the asset levels.

Until the various agencies sign of their interests it will be best not to wind up the estate.

Mojisola

Eliza wrote: »

He was on benefits and had been for years and years due to disability before pensionable age.

What should happen to this money? She feels she wants to return it to the government (not quite sure how) and apparently has notified housing benefits people and some other department.

She will get a letter from the DWP and they will recoup any overpayment once they've seen the details.

If she distributes any of the money before all debts are paid, she will be personally responsible for repaying them.

Crabapple

It will also depend what benefits he was on. If there were disability benefits then he would probably have been entitled irrespective of income.

Anything that was means tested, they may well look at. DWP will write to the family and ask for information about the assets at the date of death, review that and then may ask for a repayment or more information if they think he should not have received them.

She should hang on to any statements for accounts receiving the benefits and wait for their request. Definitely don't distribute anything until it's all agreed with DWP.

Eliza_2

Thank you for all these really helpful responses. Having factual answers like this is great, I think she's a bit caught up with thinking that he saved up this money when it was paid to him to help with living expenses and every day 'getting by' when in fact he hardly used any of it as he was looked after by the kindness of others and highly subsidised services and freebies.

So from what I'm reading, I don't know much about benefits but if it was means tested, such as housing benefit, she might have to repay anything that was paid to him once his savings went over whatever the savings threshold is. Anything such as his state pension can be considered his estate. How on earth do you separate the one from t'other, goodness knows.

I'll try and raise it with her today over coffee, I'm pretty certain she has notified these departments and she's in the process of going through all his stuff for paperwork, so I think she's doing things right. It's not a huge amount of money for her to go mad and spend but it has been an eye opener into the personality of her eccentric father. So grateful to mine for having left everything shipshape with no surprises, you don't need this after someone dies!

Mojisola

Eliza wrote: »

So from what I'm reading, I don't know much about benefits but if it was means tested, such as housing benefit, she might have to repay anything that was paid to him once his savings went over whatever the savings threshold is. Anything such as his state pension can be considered his estate. How on earth do you separate the one from t'other, goodness knows.

The DWP will want enough information - bank statements, etc - to assess what he was entitled to all along the line. One thing for her to be aware of is the AIP (assessed income period) which is given to people when they claim Pension Credit. If her father had an AIP, he would have been able to go over the £10,000 savings limit without it affecting all his benefits.

Crabapple

Yep, DWP will work out what if anything is owed back to them, your friend will not need to do the maths!

Just make sure she holds onto the money until they let her know what the situation is, then she can repay from the estate and distribute what is left.

Slinky

Fairplay to your colleague for wanting to do the right thing.

Eliza_2

Thanks, I'll tell her.

She's notified the various agencies and is just waiting now, that's the last I heard anyway. Don't like to ask too much.

She's since told me that a few years there had been an investigation into his savings, I think before he became a pensioner and was receiving various disability benefits etc. However I believe the upshot was that as he was entitled to these benefits it was up to him what he spent them on and if he didn't need the money for everyday living, it was still his to keep. They couldn't exactly 'un-entitle' him. So maybe that will make a difference, not sure.

Anyway, thanks for the advice, it sounds as though she's going about it the right way.

Mojisola

Eliza wrote: »

She's since told me that a few years there had been an investigation into his savings, I think before he became a pensioner and was receiving various disability benefits etc. However I believe the upshot was that as he was entitled to these benefits it was up to him what he spent them on and if he didn't need the money for everyday living, it was still his to keep. They couldn't exactly 'un-entitle' him. So maybe that will make a difference, not sure.

It shouldn't - if you get DLA or AA, there's no rules about how you spend the money.

However, if a claimant doesn't spend the money, the accumulated capital could then affect their entitlement to other, means tested benefits.